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Niles’ financial recovery still flat

Two years since declaring fiscal emergency; plan seeks amendment

NILES — It looks like the city’s general fund will start 2017 with a lackluster carryover from 2016 and finish with even less, spurring the financial supervisory commission to demand an amendment to the financial recovery plan before a Dec. 21 meeting.

The city’s spending is keeping up with increased revenue from a 0.5 percent income tax increase voters approved in March, and plans for the 2017 budget include too many expenditures to get the city’s poorly performing funds where they need to be, according to state-appointed fiscal supervisors Tim Lintner and Nita Hendryx.

“At this point, we should be discussing emerging from financial emergency,” Commissioner Quentin Potter said. “But we are not there.”

The city was placed in fiscal emergency by the Ohio Auditor of State in October 2014. The commission is not there to govern the city, Potter stressed, but to supervise.

The new revenue is being consumed by new spending, Potter said.

“Essentially, we are here to help you cure deficit spending. But it continues in 2016,” Potter said.

Currently, the general fund is projected to carry $59,000 into the next year, but Giovanne Merlo, Niles auditor, said the city’s general fund-dependent wellness center is going to need $40,000 more than was appropriated to operate through the end of the year.

That will cut the carryover to $19,000, leaving the projection for the cash balance at the end of 2017, originally at $27,000, lower, too. Lintner said the city should be shooting for a general fund reserve that could pay for three months of operating expenses.

The budget includes overtime projections for the first time, using prior years as a guideline, Lintner said.

Budget talks were held over the last two weekends. City department heads were asked to submit their needs, including capital project desires.

Mayor Tom Scarnecchia did not name any specific areas to trim from the 2017 budget, but said it would be a push and pull with the department heads who submitted wish-list budgets.

It is not clear if the budgets requested by department heads were used to calculate the projections provided by Merlo during the meeting, or if the administration haggled the requests down before compiling the numbers.

Commission member John Davis said after 22 meetings, not a “hell of a lot” has been accomplished, with spending rising with revenue.

The other fund fiscal supervisors were worried about the water fund.

The department cut its deficit by over $1 million this year, leaving it at about $500,000 in the red by the end of the year. That is significant progress, Lintner said.

But, that deficit doesn’t budge by much, only about $20,000 by the end of 2017, according to projections. The city is destined to remain in fiscal emergency until all of its funds are in the black and have solid five-year forecasts, Lintner said.

Scarnecchia said he is upset that the city is moving into a more expensive pay structure with the Mahoning Valley Sanitary District because it is using less water, accruing a higher rate. He said the district also owes the city a $1 million rebate the district is likely to use on repairs to its dam. Scarnecchia said that isn’t fair and if the money is owed to the city, it should get it.

The board governing MVSD would have to vote to approve a payment to Niles, and courts would have to approve the deal for the district to share its profits with the city.

Hendryx reminded the commission the city’s many waterline breaks, over 100 this year, and running hydrants — to correct orange water for people in deadends — all cost money. The cost of the non-billable water is absorbed by the water department.

In 2017, the water department is also going to have to shell out cash to refurbish the water towers and contribute matches to grants to repair problematic lines. But plans to install the thousands of aging water meters the city bought and is storing in the empty city pool have not been budgeted.

“Foolish,” said Council President Robert Marino, who also sits on the commission.

Marino implored the mayor to look at the projected 2017 budget and find ways to cut spending, so the city can start to build up reserves.

In addition to coming up with amendments to the financial recovery plan, the commission asked the administration to come up with a maintenance plan for the city building to mitigate the costs of future emergency repairs, come up with a plan to get deficit funds moving in the right direction and update points on the existing financial plan, due Dec. 19, two days before the last fiscal commission meeting of the year.

Hendryx said it would be helpful to look closely at any department that is subsidized by the general fund, like the park and cemetery departments, for creative ways to save.

Scarnecchia said he doesn’t have any ideas for recovery plan amendments. Scarnecchia said his hopes are with a plan he is working on for the wellness center that will make it solvent and perhaps even free up the more than $200,000 of general fund money it is subsidized with annually. The building, which has a $240,000 bond payment every year, has never been financially independent.

rfox@tribtoday.com

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